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  • The Economic Meltdown Hits Different Industries Differently

    November 16, 2009 Timothy Prickett Morgan

    IT spending is not uniform across various industries, and when times are booming or busting, the increase or decrease in IT budgets is also not uniform. This year, some industries are being hit harder than others by the economic downturn.

    According to the analysts at Gartner, worldwide spending across the 15 vertical industries that the market researcher tracks will fall by 6.8 percent in 2009, to $2.28 trillion.

    The good news for those of you who like to look ahead (which is natural enough when the economy has been rocky, as it has been since early 2008) is that Gartner is also looking forward to some growth in 2010, just like the rest of us. The difference is that Gartner has prognosticators and economists, and the rest of us are just guessing and hoping. (I think we often do a better job of predicting, to be honest.) Anyway, Gartner’s projections as of this month are for IT spending in these 15 vertical industries will grow by 2.3 percent to $2.34 trillion. (Here’s to hoping you get a piece of the action, friend.)

    “Our expectations for when the market will return to positive growth in IT spending–and for how strong that growth will be–vary significantly by industry sector, with the majority of industries expected to enter a period of sustained, positive growth in 2011,” explains Kenneth Brant, research director at Gartner. “The three largest industry segments in 2008–financial services, manufacturing, and government–will remain the largest industry markets worldwide through 2013.”

    And you thought the financial services industry might be taken down a peg after all the shenanigans of the past several years. (OK, decades.) Bah! But, according to Gartner, the IT spending at financial services firms will decline much more deeply in 2009–down 8.3 percent to $502.6 billion worldwide–than most other industries.

    International, national, state, and local governments did their best in 2009 to keep spending on IT goods and services, and as a result Gartner expects local and regional IT spending will fall by 5.5 percent to $150.3 billion and the big guns of national and international governments will spend $239.8 billion on IT, down only 3.6 percent. The IT recession is almost three times as severe in the agriculture, mining, and construction segment, with IT spending projected to fall 9.2 percent this year, to $25.4 billion.

    Discrete manufacturers worldwide also slammed on the brakes this year, and IT spending will drop by 8.5 percent to $269.7 billion. Process manufacturers will cut their IT budgets by 7 percent to $163.6 billion. Retailers and wholesalers will cut their IT spending more or less in line with the global average across the 15 industries, and even the booming healthcare industry will experience a 6.2 percent decline on the IT budget, to $79.8 billion worldwide this year.

    Here is how Gartner ranked all the industries:

    2008 IT 2009 IT Percent
    Industry Spending Spending Change
    Agriculture, Mining and
    Construction
    $28.0 B $25.4 B -9.2%
    Communications $215.1 B $201.9 B -6.1%
    Discrete Manufacturing $294.8 B $269.7 B -8.5%
    Education $56.5 B $53.2 B -5.8%
    Financial Services $548.0 B $502.6 B -8.3%
    Healthcare $85.1 B $79.8 B -6.2%
    Local and Regional
    Government
    $159.0 B $150.3 B -5.5%
    National and
    International Government
    $248.7 B $239.8 B -3.6%
    Process Manufacturing $175.8 B $163.6 B -7.0%
    Retail Trade $147.2 B $136.5 B -7.2%
    Services $182.4 B $172.1 B -5.7%
    Transportation $108.6 B $99.8 B -8.0%
    Utilities $122.2 B $114.3 B -6.4%
    Wholesale Trade $79.6 B $74.3 B -6.7%
    Grand Total $2,450.9 B $2,283.3 B -6.8%
    Source: Gartner

    “This deep and prolonged recession has the potential to create a new market environment with stronger spheres of financial and business influence in many industries’ IT buying centers,” said Brant in a statement accompanying the data. “Vendors should develop and/or expand financial models for project justification and sales training on selling to the financial buyer and business leader.” That kind of advice makes you wonder what they have been doing so far.

    To get more fine-grained data on IT spending projections for 2009 and 2010 by industry, check out the Gartner report called Dataquest Alert: Forecast, IT Spending in Industries, Worldwide, 3Q09 Update, which you can get here.

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    Tags: Tags: mtfh_rc, Volume 18, Number 41 -- November 16, 2009

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TFH Volume: 18 Issue: 41

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    Table of Contents

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    • The Economic Meltdown Hits Different Industries Differently
    • Hewlett-Packard Eats 3Com for $2.7 Billion

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